Mar
19
2007

ICF International Reports Fourth Quarter and 2006 Full-Year Results

 

 

Fairfax, Virginia, March 19, 2007 -

ICF International, Inc. (NASDAQ: ICFI), a leading provider of consulting services and technology solutions to government and commercial clients, today reported full-year net income of $11.9 million, which was 3.6% of revenue of $331.3 million for the year ended December 31, 2006, and fourth quarter net income of $9.2 million, which was 8.1% of revenue of $113.9 million for the fourth quarter of 2006.

Fourth-Quarter Results

Fourth quarter 2006 revenue of $113.9 million was up 5.7% sequentially from the $107.8 million reported for the 2006 third quarter.  In the 2005 fourth quarter, ICF generated revenue of $51.8 million.

Fourth quarter 2006 net income was $9.2 million, or $0.65 per diluted share. In the 2006 third quarter, the Company reported net income of $3.0 million, or $0.28 per diluted share, including a non-recurring incentive compensation charge of $2.7 million.  Several factors accounted for the difference in net income in the sequential quarters, including: lower fourth-quarter costs for incentive compensation, business development, and health benefits; interest income of $0.1 million in the fourth quarter compared to interest expense of $1.2 million in the third quarter, and a substantially lower tax rate in the fourth quarter.  In the 2005 fourth quarter, the Company incurred a net loss of $1.0 million, which included non-recurring, pre-tax, non-cash charges of $3.9 million, representing a $2.1 million charge related to for the acceleration of stock-option vesting and a $1.8 million charge attributable to the change in the estimated life of intangible assets related to a prior acquisition.

Revenue from The Road Home contract was $60.5 million in the 2006 fourth quarter,   compared to $55 million in the 2006 third quarter.  ICF was awarded this contract in June 2006 by the State of Louisiana’s Office of Community Development.

On January 10, 2007, ICF announced the acquisition of the Arlington Virginia-based Energy and Environmental Analysis, Inc., a 27-person consulting firm that specializes in energy market analyses, modeling, transportation and energy technology, and environmental advisory services. The combined expertise and analytical tools of the firm is expected to provide strategic product and business development opportunities.

On January 23, 2007, ICF announced the acquisition of Advanced Performance Consulting Group, a 29-person Washington, D.C.-based consulting firm specializing in assisting federal agencies improve business performance during times of increasing budget pressures, regulatory compliance requirements and technology-driven change. APCG’s specialized consulting services complement ICF’s ability to provide end-to-end client solutions.

“In the 2006 fourth quarter, ICF reported solid financial results, utilizing our specialized domain experience to advise and implement projects for a diversified group of governmental and commercial clients,” commented Sudhakar Kesavan, Chairman and Chief Executive Officer.  “We succeeded in winning important re-competitions, gaining new contracts, and negotiating two small, yet strategic acquisitions,” he noted.

Full-Year 2006 Results

Full-year 2006 revenue was $331.3 million and net income was $11.9 million, or $1.10 per diluted share, which includes non-cash compensation expenses of $1.1 million, as required by FAS 123(R). The non-recurring charges consisted of a $4.3 million abandoned office space charge for unused facilities and the $2.7 million bonus noted above. For the year ended December 31, 2005, the Company’s revenue was $177.2 million and net income was $2.0 million, or $0.21 per diluted share, which included the $2.1 million in non-cash compensation mentioned above.

Backlog and New Business Award Highlights

At the end of the 2006 fourth quarter, the Company had total backlog of $969 million, of which 79 percent was funded, compared to total backlog at the end of the 2006 third quarter of $317 million, of which 49 percent was funded.

On October 19, 2006, the Company announced that it had received funding authorization for the second and third phases of The Road Home contract. The combined value of these two phases is approximately $669 million over a three-year period.

Other competitive contracts won during the quarter include:

Recent Developments

The Company is currently working with the Louisiana Division of Administration to clarify performance metrics on The Road Home contract, one of the deliverables in the contract. ICF believes that this will be a constructive way for all stakeholders to measure the program’s progress based upon fixed and transparent monthly metrics. Additionally, the State of Louisiana and U.S. Department of Housing and Urban Development are in discussions to clarify implementation processes for The Road Home program.

Outlook

"ICF entered 2007 with a solid backlog, and we are continuing to build our service capabilities across the full life cycle of client needs. Because of our recognized expertise, we see significant opportunities for growth across our markets, especially in homeland security, climate change, and energy. We also will continue to seek strategic acquisitions. As a result, we expect that 2007 will be a year of solid growth for ICF," Mr. Kesavan noted.

Based on currently available information, the Company expects to report revenues for the quarter ending March 31, 2007, in the range of $125 million to $135 million and for the full year 2007 in the range of $480 million to $520 million. For both the quarter and the year, the Company seeks to earn net income equal to approximately 5% of revenues.


ICF International, Inc.
Consolidated Statements of Operations 
(in thousands, except per share amounts)
 
   
Three months ended
   
CYE
   
Dec.31
2006
Dec.31
2005
    Dec.13
2006
Dec.31
2005
       
    Unaudited   Unaudited     Unaudited   Audited
                   
Gross Revenue $ 113,885 $ 51,782   $ 331,279 $ 177,218
                   
      Direct Costs   78,072   31,198     217,747   106,078
      Indirect and selling expenses   19,896   18,265     87,056   60,039
      Depreciation and amortization   921   3,147     3,536   5,541
                   
Earnings from Operations   14,996   (828)     22,940   5,560
                   
Other (Expense) Income                  
      Interest expense, net   116   (1,143)     (3,229)   (2,981)
      Other   77   (12)     366   1,308
Total Other Expense   193   (1,155)     (2,863)   (1,673)
                   
Income before income taxes   15,189   (1,983)     20,077   3,887
                   
Income Tax Expense   5,983   (951)     8,210   1,865
                   
Net Income   9,206   (1,032)     11,867   2,022
                   
Earnings per Share–Basic $ 0.68 $ (0.11)   $ 1.15 $ 0.22
Earnings per Share–Diluted $ 0.65 $ (0.11)   $ 1.10 $ 0.21
                   
Weighted-avg Shares O/S–Basic   13,527   9,217     10,321   9,185
Weighted-avg Shares O/S–Diluted   14,179   9,769     10,796   9,737

ICF International, Inc.
Consolidated Statements of Operations
As a percentage of Gross Revenue, except the tax provision
 
    Three months ended CYE
    Dec. 31
2006
Dec. 31
2005
Dec. 31
2006
Dec. 31
2005
   
    Unaudited   Unaudited Unaudited   Audited
               
Gross Revenue   100.0%   100.0% 100.0%   100.0%
               
      Direct Costs   68.6%   60.2% 65.7%   59.9%
      Indirect and selling expenses   17.5%   35.3% 26.3%   33.9%
      Depreciation and amortization   0.81%   6.1% 1.1%   3.1%
               
Earnings from Operations   13.2%   -1.6% 6.9%   3.1%
               
Other (Expense) Income              
      Interest expense, net   0.1%   -2.2% -0.9%   -1.7%
      Other   0.1%   0.0% 0.1%   0.7%
Total Other Expense   0.2%   -2.2% -0.8%   -0.9%
               
      taxes   13.3%   -3.8% 6.1%   2.2%
Income Tax Expense   39.4%   48.0% 40.9%   48.0%
               
Net Income   8.1%   -2.0% 3.6%   1.1%

ICF International, Inc.
Consolidated Balance Sheets
 
    As of
December 31, 2006
As of
December 31, 2005
   
    Unaudited   Audited
Assets        
Current Assets        
   Cash  $ 2,997 $ 499
   Contract receivables, net   110,548   52,871
   Prepaid expenses   2,659   1,549
   Deferred income tax   2,494   2,342
Total Current Assets   118,698   57,261
         
Property and Equipment, net   5,388   3,984
         
Goodwill   83,833   81,182
Other Intangible Assets   2,720   4,127
Restricted Cash   3,703   3,500
Other Assets   1,485   1,070
Total Assets $ 215,827 $ 151,124
         
Liabilities and Stockholders’ Equity        
Current Liabilities        
   Accounts payable $ 19,455 $ 7,062
   Accrued salaries and benefits   17,727   10,201
   Accrued expenses   37,202   8,271
   Current portion of long-term debt   —    6,767
   Deferred Revenue   18,281   6,396
   Income tax payable   3,682   423
Total Current Liabilities   96,347   39,120
         
Long-term Debt, net of current portion   —    54,205
Deferred Rent   1,599   1,568
Deferred Income Tax   1,324   2,730
Other Liabilities   2,610   598
Total Liabilities   101,880   98,221
         
Commitments and Contingencies   —    — 
         
Stockholders’ Equity        
   Common stock    14   9
   Additional paid-in capital   98,995   50,909
   Retained earnings   15,701   3,834
   Treasury stock   (428)   (918)
   Stockholder notes receivable   (562)   (1,139)
   Accumulated other comprehensive income    227   208
Total Stockholders’ Equity   113,947   52,903
         
Total Liabilities & Stockholders’ Equity $ 215,827 $ 151,124

ICF International, Inc., and Subsidiaries
Consolidated Statements of Cash Flows
 
Year ended December 31,   
2006
2005
(in thousands of dollars)  
Unaudited
Audited
         
Cash Flows from Operating Activities        
  Net income $ 11,867 $ 2,022
         
  Adjustments to reconcile net income to net cash         
  provided by operating activities:        
  Accrued interest on stockholder notes   (59)   (60)
  Deferred income taxes   (1,558)   (1,916)
  Loss on disposal of fixed assets   21   50
  Abandonment of leased space   4,064   — 
  Non-cash equity compensation   1,069   2,138
  Depreciation and amortization   3,536   5,541
  Changes in operating assets and liabilities:        
  Contract receivables   (57,907)   (4,340)
  Prepaid expenses and other assets   (1,336)   (100)
  Accounts payable   12,024   1,279
  Accrued salaries and benefits   7,526   (3,170)
  Accrued expenses   23,761   (580)
  Deferred revenue   11,885   1,670
  Income tax payable   3,259   (472)
  Deferred rent   (40)   41
  Other liabilities   (583)   133
         
Net Cash Provided by Operating Activities   17,529   2,236
         
Cash Flows from Investing Activities        
  Capital expenditures   (1,681)   (1,370)
  Payments received on notes receivable     1,200
  Payments for trademark applications   (75)   — 
  Payments for Synergy, Inc., net of cash received  
  (18,546)
  Payments for Caliber Associates, Inc., net of cash received   102   (20,058)
  Capitalized software development costs   (119)   (70)
         
Net Cash Used in Investing Activities   (1,773)   (38,844)
         
Cash Flows from Financing Activities        
  Payments on notes payable   (29,634)   (21,808)
  Proceeds from notes payable   —    38,647
  Net borrowings from (payments on) working capital facilities (31,338)   23,054
  Restricted cash related to Caliber acquisition   (203)   (3,500)
  Debt issue costs   (262)   (525)
  Proceeds from initial public offering   46,378   — 
  Exercise of options/warrants   481   — 
  Tax benefits of stock option exercises   214   — 
  Net payments for stockholder issuances and buybacks   256   312
  Payments received on stockholder notes   831   107
Net Cash (Used In) Provided by Financing Activities (13,277)   36,287
         
Effect of Exchange Rate on Cash   19   23
         
Increase (Decrease) in Cash   2,498   (298)
         
Cash, beginning of year   499   797
Cash, end of year $ 2,997 $ 499
Supplemental disclosures of cash flow information:        
          Cash paid during the period:        
                   Interest $ 3,862 $ 2,839
                   Income taxes $ 6,418 $ 4,954

To view the full release, including financial tables, download the PDF.

 

 

About ICF International

ICF International (Nasdaq: ICFI) partners with government and commercial clients to deliver consulting services and technology solutions in the energy, environment, transportation, social programs, defense, and homeland security markets. The firm combines passion for its work with industry expertise and innovative analytics to produce compelling results throughout the entire program life cycle, from analysis and design through implementation and improvement. Since 1969, ICF has been serving government at all levels, major corporations, and multilateral institutions. More than 2,000 employees serve these clients worldwide. ICF's Web site is http://www.icfi.com.

Caution Concerning Forward-looking Statements

This document may contain “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995—that is, statements related to future—not past—events, plans, and prospects. These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “guidance,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “seek,” “should,” “will,” “would,” or similar words. You should read statements that contain these words carefully because they discuss our future expectations, contain projections of our future results of operations or of our financial position, or state other forward-looking information, and are subject to factors that could cause actual results to differ materially from those anticipated. For ICF, particular uncertainties that could adversely or positively affect the Company’s future results include but are not limited to: risks related to the government contracting industry, including the timely approval of government budgets, changes in client spending priorities, and the results of government audits and investigations; risks related to our business, including our dependence on contracts with U.S. Federal Government agencies and departments and the State of Louisiana; continued good relations with these and other customers; success in competitive bidding on recompete and new contracts; performance by ICF and its subcontractors under our contract with the State of Louisiana, Office of Community Development, including but not limited to the risks of failure to achieve certain levels of program activities, termination, or material modification of the contract, and political uncertainties relating to The Road Home program; uncertainties as to whether revenues corresponding to the Company’s contract backlog will actually be received; the future of the energy sector of the global economy; our ability to attract and retain management and staff; strategic actions, including attempts to expand our service offerings and client base, the ability to make acquisitions, and the performance and future integration of acquired businesses; risks associated with operations outside the United States, including but not limited to international, regional, and national economic conditions, including the effects of terrorist activities, war, and currency fluctuations; and other risks and uncertainties disclosed in the Company’s filings with the Securities and Exchange Commission. These uncertainties may cause ICF’s actual future results to be materially different than those expressed in the Company’s forward-looking statements. ICF does not undertake to update its forward-looking statements.

For Immediate Release
Contact: Douglas Beck
1.703.934.3820

Contact: Lynn Morgen / Betsy Brod
MBS Value Partners
1.212.750.5800

 
 
 

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